Serverside Grp. Ltd. v. Tactical 8 Techs., L.L.C.

• Decision Date: 09 December 2013
• Docket Number: No. C 12–2016–MWB.,C 12–2016–MWB.
• Citation: 985 F.Supp.2d 900
• Parties: SERVERSIDE GROUP LIMITED and Serverside Graphics, Inc., Plaintiffs, v. TACTICAL 8 TECHNOLOGIES, L.L.C., and Bank Iowa Corporation, Defendants.
• Court: U.S. District Court — Northern District of Iowa

985 F.Supp.2d 900

SERVERSIDE GROUP LIMITED and Serverside Graphics, Inc., Plaintiffs,
v.
TACTICAL 8 TECHNOLOGIES, L.L.C., and Bank Iowa Corporation, Defendants.

No. C 12–2016–MWB.

United States District Court,
N.D. Iowa,
Eastern Division.

Dec. 9, 2013.

[985 F.Supp.2d 903]

Charles T. Steenburg, Hunter D. Keeton, Michael A. Albert, Wolf, Greenfield & Sacks, PC, Boston, MA, Glenn L. Johnson, Nyemaster Goode, P.C., Cedar Rapids, IA, for Plaintiffs.

Michael A. Dee, Brant D. Kahler, G. Brian Pingel, Brown, Winick, Graves, Gross, Baskerville & Schoenebaum, PLC, Des Moines, IA, for Defendants.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND MOTION TO STRIKE AFFIDAVIT OF PLAINTIFFS' EXPERT
MARK W. BENNETT, District Judge.

TABLE OF CONTENTS

I.	INTRODUCTION	904
II.	THE MOTION TO STRIKE	905

A.	Procedural History	906
B.	Arguments Of The Parties	907

1.	The Iowa Defendants' opening argument	907
2.	Serverside's response	908
3.	The Iowa Defendants' reply	908

C.
Legal Analysis
908

1.	Rule 26 and Rule 37 standards	908
2.	Rule 56 standards	913
3.	Summary	914

III.
THE MOTION FOR SUMMARY JUDGMENT
914

A.
Context Of The Motion
914

1.	The patents-in-suit	914
2.	The key patent claims at issue	915
3.	The patent claim terms at issue	915

B.
Factual Background
917

1.	The parties' factual allegations and denials	917
2.	The accused system	917

a.	Parts and users of the Cre8MyCard system	917
b.	Customization by a remote customer	917
c.	Processing of the customized card by the financial; institution	920
d.	Card manufacturing	921
e.	”Instant” production methods	921
f.	Use of hash codes and encryption in the accused system	922

C.	Standards For Summary Judgment	922
D.	Standards For Patent Infringement	923
E.	Grounds For Summary Judgment	926

1.	Infringement under the doctrine of equivalents	926
2.	Implications of non-infringement of the first claims	927
3.	Absence of “a customer identifier that corresponds to the remote customer that personalized said image,” as claimed in the '199 and the '490 patents	929

a.	Arguments of the parties	929
b.	Analysis	930

4.
Absence of a “customer identifier [that] comprises an identifier selected from a secure unique identifier and a one-way code,” as claimed in the '199 patent
932

a.	Arguments of the parties	933
b.	Analysis	934

i.	Secure unique identifier	934
ii.	One-way code	938

5.
Absence of a “customer identifier [that] encompasses encrypted customer information,” as claimed in the '490 patent
939

a.	Arguments of the parties	940
b.	Analysis	941

6.
Summary
943

IV.
CONCLUSION
943

[985 F.Supp.2d 904]

This patent-infringement action, alleging infringement of two of the plaintiffs' patents, both entitled “Computerized Card Production Equipment,” is before me on the defendants' motion for summary judgment and the defendants' motion to strike the affidavit of the plaintiffs' expert offered in resistance to the defendants' motion for summary judgment. I previously construed disputed terms of the patents in a Markman ruling. Thus, the question on the defendants' motion for summary judgment is whether their accused “system for the customization of financial transaction cards” infringes the patents as I have construed them. The preliminary question, however, is whether or not I can consider the affidavit of the plaintiffs' expert in deciding the summary judgment motion, where the defendants contend that the affidavit presents new and previously undisclosed expert opinions.

I. INTRODUCTION

On June 22, 2011, plaintiffs Serverside Group Limited and Serverside Graphics, Inc., collectively “Serverside,” filed the original Complaint in this patent infringement action, against fifteen defendants, in the United States District Court for the District of Delaware (the Delaware action). Serverside's Complaint alleges infringement of certain claims of its U.S. Patent No. 7,931,199 (the '199 patent), entitled “Computerized Card Production Equipment,” in Count I, and infringement of certain claims of its related U.S. Patent No. 7,946,490 (the '490 patent), also entitled “Computerized Card Production Equipment,” in Count II. Somewhat more specifically, Serverside alleges that the Iowa Defendants, defendants Tactical 8 Technologies, L.L.C., now known as Banno, L.L.C. (Banno),¹ and Bank of Iowa Corporation (BIC), are infringing the patents-in-suit

[985 F.Supp.2d 905]

by using the “Cre8MyCard system,” which the parties agree is an Internet-based system that allows for the customization of financial transaction cards from financial institutions, such as BIC, that are Banno's customers.

On February 17, 2012, United States District Court Judge Richard Andrews entered a Memorandum Opinion in the Delaware action, in response to motions by several of the defendants, in which he concluded, inter alia, that the claims against the Iowa Defendants should be transferred to this court, pursuant to 28 U.S.C. § 1406(a). That same day, Judge Andrews entered a separate Order transferring the claims against the Iowa Defendants to this court pursuant to 28 U.S.C. § 1406(a). After this action was transferred to this district, it was initially assigned to Chief United States District Court Judge Linda R. Reade, but it was eventually reassigned to me on August 29, 2012. After a Markman hearing on February 20, 2013, I entered my ruling on construction of disputed patent claim terms on March 4, 2013. See Serverside Group Ltd. v. Tactical 8 Techs., L.L.C., 927 F.Supp.2d 623 (N.D.Iowa 2013).

On August 12, 2013, the Iowa Defendants filed the first of the motions now before me, the Iowa Defendants' Motion For Summary Judgment (docket no. 133), in which the Iowa Defendants assert that there are no genuine issues of material fact, and that they are entitled to judgment as a matter of law, that their Cre8MyCard system does not infringe the independent claims in claim 1 of the '199 patent and claim 1 of the '490 patent, so that they also are not infringing any dependent claims of those patents. Serverside filed a Resistance (docket no. 134) to that Motion on September 5, 2013, and the Iowa Defendants filed a Reply (docket no. 136) in further support of that Motion on September 16, 2013.

On September 16, 2013, the Iowa Defendants filed the second motion now before me, their Motion To Strike (docket no. 137), in which they argue that the affidavit of Serverside's expert, Alex Cheng, offered by Serverside in support of its Resistance to the Motion For Summary Judgment, must be stricken, because it contains new opinions not properly disclosed previously pursuant to Rule 26(a)(2)(B)(i), and that portions of Serverside's Statement Of Additional Material Facts that rely, in whole or in part, on Mr. Cheng's affidavit must also be stricken. Serverside filed its Resistance (docket no. 139) to that Motion on October 3, 2013, and the Iowa Defendants filed a Reply (docket no. 142), in further support of that Motion, on October 15, 2013.

Trial in this matter is set to begin on January 21, 2014, so I had hoped to address the pending motions as soon as they were ripe. However, other matters interfered with that plan, including a Verified Complaint And Petition For Return Of Children, seeking return to Mexico of children allegedly wrongfully retained in the United States, filed November 7, 2013, which required expedited proceedings under international and federal law. For much the same reason, my crowded schedule has not allowed me to accommodate the Iowa Defendants' request for oral arguments on their Motions sufficiently in advance of the scheduled trial. I find the parties' written submissions fully address the issues raised, however, so that I have resolved the pending motions on the parties' written submissions.

II. THE MOTION TO STRIKE

I must first resolve the Iowa Defendants' Motion To Strike, as it pertains to the record that I may consider on the Iowa

[985 F.Supp.2d 906]

Defendants' Motion For Summary Judgment. I will begin my analysis of that Motion by briefly summarizing the procedural history concerning disclosure of experts.

A. Procedural History

In accordance with the Scheduling Order (docket no. 112), Serverside served its Claim Chart setting forth its infringement contentions on October 5, 2012, and the Iowa Defendants served and filed their Claim Chart (docket no. 119), asserting their noninfringement contentions, on November 2, 2012. Serverside produced the Expert Report Of Alex Cheng Regarding Infringement By Tactical 8 Technologies, L.L.C., And Bank Of Iowa Corporation (Cheng Report), on or about May 10, 2013. See Plaintiffs' Appendix (docket no. 134–4), 38–188. The Iowa Defendants produced their Responsive Expert Report Of Peter Alexander, Ph.D., Regarding Non–Infringement Of U.S. Patents No[s]. 7,908,199 And 7,599,490 (Alexander Report) (docket no. 131), on June 7, 2013. Serverside never produced a supplemental or rebuttal expert report from Mr. Cheng or anyone else related to the issues raised in Mr. Cheng's Expert Report or Dr. Alexander's Expert Report. Fact and expert discovery closed on July 12, 2013, without any expert depositions being taken by either side.

The Iowa Defendants filed their Motion For Summary Judgment (docket no. 133) on August 12, 2013, relying primarily on the deposition of David Wade Arnold, Banno's chief executive officer, rather than the Alexander Report, as the basis for its arguments on non-infringement. On September 5, 2013, Serverside submitted as part of and as the basis for much of its Resistance to the Iowa Defendants' Motion For Summary Judgment an Expert Declaration Of Alex Cheng In Support Of Plaintiff's Opposition To Defendants' Motion For Summary Judgment (Cheng Declaration). See Plaintiffs' Appendix (docket no. 134–4), 1–37.

In his Declaration, Mr. Cheng declares, inter alia,

3. Some of my expert opinions and non-confidential bases therefore are set forth in the Expert Report of Alex Cheng Regarding Infringement by Tactical 8 Technologies, L.L.C., and Bank of Iowa Corp. (“Cheng Report”). The Cheng Report is filed as an attachment to the Appendix in Support of Plaintiff's...